Question And Answer
Subject: Section 15 of CGST Act and discounts
Querist: Sree lekha
Answered by:
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Date: June 10, 2023
Query asked by Sree lekha


In case of vehicle sales by the automobile dealers, they issue some discounts to the customers by way of a credit note after issuing the initial invoice. Whether these discounts can be reduced for the purposes of determining taxable value as per section 15 of CGST Act, 2017 as it is a post sale transaction?

Please clarify.

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Answer given by

About discount, Section 15(3) provides as under:
Section 15 – Value of Taxable Supply
“(3) The value of the supply shall not include any discount which is given––
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.”
Therefore, only pre-agreed discount is allowable. Since in present case it is post sale discount, it will not be reducible from invoice value. However, if any discount is pre-agreed like in a purchase order etc. then it can be reducible.

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